On May 16, 2016, the U.S. Supreme Court issued its long-awaited opinion in Spokeo, Inc. v. Robins, No. 13-1339, addressing the question of Article III standing in consumer class actions where the plaintiffs allege statutory violations absent concrete harm. The case, arising under the Fair Credit Reporting Act of 1970, 15 U.S.C. § 1681, et seq. (“FCRA”), involved a plaintiff who sought statutory damages for a violation of the reporting requirements of the FCRA even though the inaccurate information reported cast the plaintiff in a favorable light. The Ninth Circuit had held that the FCRA’s application to the plaintiff’s individual facts and grant of statutory damages for willful violations was a sufficient injury to confer standing under Article III of the U.S. Constitution. The Supreme Court granted certiorari to consider whether the Constitution requires more.
Perhaps reflecting the absence of a ninth justice, the Supreme Court did not decide whether the plaintiff had standing and instead remanded the case to the Ninth Circuit for further review. The Court did, however, furnish important guidance on the need to allege “concrete” injury to satisfy Article III standing and the constitutional limits of standing with respect to legislation that provides for statutory damages. As such, Spokeo may provide critical guidance for future cases when a plaintiff in federal court alleges standing based solely on a violation of a statute without any identifiable harm.
The FCRA allows plaintiffs to recover actual damages or $100 to $1,000 in statutory damages for willful violations, as well as costs and attorneys’ fees. The statute requires “consumer reporting agencies” to “follow reasonable procedures to assure maximum possible accuracy of consumer reports,” to notify providers and users of consumer information of their responsibilities under the FCRA, to limit the circumstances in which agencies provide consumer reports “for employment purposes,” and to post toll-free numbers for consumers to request consumer reports.
The defendant, Spokeo, operates an online “people search engine,” which scans websites, public records, and other databases to gather personal information about a queried individual. Spokeo’s typical users range from prospective employers to potential romantic partners. The plaintiff filed a putative class action lawsuit against Spokeo under the FCRA after learning that his queried profile contained multiple pieces of incorrect information, including his marital status, children, age, employment, wealth, and education, all of which suggested that he was more successful than he really was.
The district court dismissed the plaintiff’s putative class action complaint for lack of jurisdiction because he had failed to prove standing under Article III, which only permits federal courts to adjudicate actual “cases or controversies.” The Ninth Circuit reversed, holding that the plaintiff had met Article III’s “injury-in-fact” requirement: (1) by alleging that “Spokeo violated his statutory rights, not just the statutory rights of other” putative class members; and (2) because the plaintiff’s “personal interests in the handling of his credit information are individualized rather than collective.”
III. The Supreme Court’s Opinion
The Supreme Court vacated the Ninth Circuit’s judgment and remanded the case in a 6-2 opinion written by Justice Alito. The opinion focuses on two issues: (1) the need for injuries to be “concrete and particularized” under Article III; and (2) the limitations on Congress’ ability to confer private rights of action based on “bare” violations of statutory procedure.
A. Concrete and Particularized
The Supreme Court has interpreted Article III’s “case or controversy” requirement to consist of three elements: a plaintiff (1) must have suffered an “injury in fact” (2) that is “fairly traceable to the challenged conduct of the defendant” and (3) that is “likely to be redressed by a favorable judicial decision.” The “injury-in-fact” element consists of three sub-elements: a plaintiff (a) must have suffered “an invasion of a legally protected interest” (b) that is “concrete and particularized” and (c) that is “actual or imminent, not conjectural or hypothetical.”
Spokeo is the first time the Supreme Court has explored the meaning of the phrase “concrete and particularized.” The Court’s primary message was that the words are not synonymous, and plaintiffs must satisfy both requirements. By “particularized,” an injury “must affect the plaintiff in a personal and individual way.” By “concrete,” however, a plaintiff’s injury must be “real” and not “abstract” (but not necessarily “tangible,” as in the case of free speech violations).
The Court held that the Ninth Circuit’s analysis had conflated these two inquiries. By observing only that the plaintiff had alleged a violation of his own rights and asserted his own interest in the proper handling of his personal credit information, the Ninth Circuit had only found that the injury was “particularized.” The Ninth Circuit had not considered whether the alleged violations of FCRA procedures and the ensuing dissemination of incorrect, but potentially harmless or even favorable, personal information about the plaintiff were sufficiently “concrete” injuries for purposes of Article III. Therefore, the case was remanded for further consideration.
B. Limits on Congressional Power
In remanding the case, the Court was clear that, in the case of intangible harms, establishing “concreteness” requires more than pointing to a violation of a federal statute. When considering whether intangible harms are sufficient to satisfy Article III standing requirements, courts should look both to “history” and to “the judgment of Congress.” That is, courts should consider “whether an alleged intangible harm has a close relationship to a harm that has traditionally been regarded as providing a basis for a lawsuit in English or American courts.” In addition, Congress may elevate concrete, de facto injuries that were previously inadequate in law to the status of legally cognizable injuries.
Congressional judgment, however, is only “instructive” and not dispositive on the issue of concreteness. The Court was clear: “Congress’ role in identifying and elevating intangible harms does not mean that a plaintiff automatically satisfied the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.”
In this respect, the Court instructed lower courts to distinguish between “bare” procedural violations of statutes and procedural violations carrying a “risk of real harm.” A “bare” procedural violation will not satisfy the injury-in-fact requirement of Article III. That is, a defendant’s mere noncompliance with a statutory procedure designed to protect a class of individuals, by itself, does not qualify as “concrete harm” even when the statute provides a statutory damages recovery. When the violation of a procedural statute creates a “risk of real harm” that is concrete, the plaintiff may have Article III standing.
As examples, the Court pointed to two cases where the Court had found Article III standing solely by virtue of the plaintiffs’ inability to access disclosures that were supposed to be publicly available. Standing had existed because of the inherent risk of blocking access to information of public importance. In contrast, identifying the wrong zip code in a credit report (a possible result of a procedural violation of the FCRA) would be insufficient because it would be “difficult to imagine how the dissemination of an incorrect zip code, without more, could work any concrete harm.” Therefore, the Court instructed the Ninth Circuit to consider “whether the particular procedural violations alleged in this case entail a degree of risk sufficient to meet the concreteness requirement.”
C. Concurrence & Dissent
Justice Thomas joined the majority opinion but wrote separately to provide his view that the constitutional standing analysis should more closely adhere to the common law. According to Justice Thomas, at common law courts conducted different standing inquiries based on whether plaintiffs sought the vindication of public or private rights. In his view, most of the instant allegations concerned “public” rights, which would require a specialized showing of concreteness (while allegations concerning “private” rights only would require alleging a violation of a duty).
Justice Ginsburg, joined by Justice Sotomayor, dissented. Justice Ginsburg wrote that the majority had unnecessarily parsed the terms “concrete” and “particularized,” which had been treated similarly in the past. In addition, Justice Ginsburg believed that the plaintiff had alleged sufficiently concrete harm to satisfy Article III by alleging that the incorrect personal information had caused actual harm to his employment prospects (e.g., by listing him as employed when he was out of work).
The central guidance of Spokeo is that Congress cannot manufacture standing under Article III and that a plaintiff in federal court must have suffered concrete harm. Although Congress may “elevate” previously “inadequate” concrete injuries to the status of “legally cognizable,” Congress cannot transform the injury itself from “abstract” to “concrete.” This is particularly important in the context of statutory damages, such as those recoverable under the FCRA. Spokeo instructs that Congress may not combine a private right of action with mandatory damages awards (e.g., $100 to $1,000) for statutory violations as a substitute for requiring actual injury to the plaintiff. In other words, even if Congress passes a statute that is designed to grant private damages for a class of individuals, any plaintiff still must have suffered a “real” injury in lieu of seeking “damages” that are nothing more than a bounty for violating a statutory procedure.
Spokeo did not articulate a standard for when violations of purely “procedural” statutory provisions may result in sufficiently concrete harm to confer constitutional standing. On one hand, the Court instructed that a “bare” procedural violation is insufficient. Presumably, the Court’s “zip code” example falls into this category. On the other hand, the Court explained that “the risk of real harm” (i.e., something short of “real harm”) can be sufficiently “concrete” to confer Article III standing. Thus, the continuum from “bare” procedural violations to “real harm” will need to be addressed in any standing analysis under Spokeo.
In the end, Spokeo (which was argued more than six months ago) reads like a compromise decision among the eight-member Court. Yet it offers a clear message that there must be a separate finding of concrete harm to confer constitutional standing and that a defendant’s mere violation of a statute, without more, is insufficient to create standing for a plaintiff seeking to file a private civil action in federal court. This will also likely impact the class certification process and whether a named plaintiff can represent groups who would otherwise not meet the Spokeo standing requirements. On remand, the Ninth Circuit will address the contours of the Court’s decision, which may, in turn, warrant further analysis by the Supreme Court. Litigants would be wise to reevaluate existing circuit precedent under the guidance of this decision.